At BBB level with stable prospects
Scope Ratings upgraded the Greek economy to BBB with stable outlook from BBB- with positive outlook.
Scope was the first, recognized by the European Central Bank, to give investment grade to Greece in August 2023 and is now the first to upgrade its creditworthiness within the investment grade. A reduction in public debt, improved resilience of the banking system and a stronger growth trend were the main drivers that led to the upgrade, according to the German house. “The still high public debt and structural financial weaknesses remain limiting factors of the credit rating,” he adds.
The upgrade to the BBB rating reflects Scope’s expectation of a continued decline in Greece’s general government debt ratio over the coming years. This reduction is driven by favorable debt dynamics, alongside stronger-than-expected primary fiscal surpluses and a consequent further reduction in the overall fiscal deficit.
The resilience of the banking system is bolstered by progress in reducing non-performing loans (NPLs), the privatization of systemic banks and the gradual amortization of deferred tax credits (DTCs) on bank balance sheets.
In addition, the adoption of structural reforms and investment, the reduction of macroeconomic imbalances and more stable support from European institutions are strengthening macroeconomic sustainability and the growth trend, Scope reports.
